Who sets gas prices? At The Pantry, these folks do

SANFORD -- At some point, nearly every driver has wondered why one gas station charges $2.93 a gallon and another $2.89.

There are 11 people in a faded blue trailer in Sanford who know the answer.

Those 11 are responsible for setting the gas prices at the 1,639 stores owned by The Pantry, the Southeast's leading independent convenience store chain. They crunch numbers, run data and transmit new prices to each of the stores every day but Sunday.

Mark Holmes, who leads the team, calls what they do there a "never-ending puzzle," balancing the need for profit with the need to sell more gallons and keep up with the competition.

Their job has gotten harder as gas pricing has become more volatile and the public's resentment of rising gas prices has grown.

On Friday, the team's day started about 8:30 a.m. The employees entered the trailer toting smokes, takeout from McDonald's and Bojangles', lunches from home and, in Cliff Sizemore's case, two Mountain Dews and four Sunkist orange sodas.

"I knew it was going to be a long one," he said. "That's why I brought the six-pack."

Nine- and 10-hour days are typical, but Sizemore was expecting the worst because the market that determines the daily price of gas sold to The Pantry and other companies had closed higher, a substantial 91/4 cents, the previous night.

That increase meant that all gas sellers would be making big price adjustments.

There were other factors: Wildfires in Florida had triggered a state of emergency. A report predicted a rough hurricane season. And several refineries were shut down.

Then there's the competition.

"I can say, 'Go up 10 cents,' if I want, but if I'm at $2.60 and the guy across the street is at $2.50, I just lost a ton of business," Holmes said.

Halfway down the trailer's hallway, Cindy Marsh's phone rang constantly as district and store managers from her Mississippi and Louisiana territory called in for guidance.

As part of the morning routine, each store manager checks competitors' prices and reports them to headquarters. Some stores track as many as nine competitors.

Many report through the company's electronic system. Those with more pressing concerns call in. On busy mornings, the team can easily field 2,000 calls.

Friday morning, Marsh's interchanges with her managers came in rapid-fire bursts.

"Where'd they move to?"

"$2.84?"

"Where'd you move to?"

"$2.82?"

"I want us to be the first movers here, if you don't mind," she said. "Let's take them up to $2.84."

Down the hall, Michelle Knight's Florida stores were calling for updates. Because a state of emergency had been declared, companies could not immediately raise their prices, despite the overnight increase in gas costs.

"We lost a lot of money last night," she said. "They're all on pins and needles waiting for the competitors to move."

In an office between Marsh and Knight, Sizemore dealt with a distribution problem created when the supply of Exxon gas at the Selma terminal ran out and he had to route drivers to Greensboro.

A former teacher, Sizemore has been on the job for three months and said he's adjusting to the pace.

"It takes a little while for new people because they're scared to drop it even by a penny," Holmes said. Then again, he said, reaching for a nearby calculator, "A penny times 5,000 gallons a day is $50. Times 365 days and 1,600 stations, it's $29.2 million."

About 11:30 a.m. each day, Holmes and other Pantry executives hold a five-minute meeting.

On the table: what happened overnight, what the competition is doing, how aggressive they want to be with prices, and which markets they want to be more active in. For instance, The Pantry recently acquired 66 stores in Charlotte and wants to be sure that its prices are the ones that the other stations follow.